Import costs for Iran will decline by at least 10% after the nuclear deal with the P5+1 comes into effect, Gholamali Kamyab, Central Bank of Iran deputy governor for foreign exchange affairs said Sunday.
"Normalization of relations with foreign banks will enable the banking sector to use negotiable instruments, issue letters of credit and guarantees through legal channels, which in turn will reduce money transfer and payment expenses," the CBI website quoted him as saying.
CBI has been holding talks with several foreign banks and export insurance companies in recent months to prepare domestic banks for the post sanctions era. “We expect relations to be upgraded to levels higher than the pre-sanctions period.”
Iran’s agreement with the six world powers (five permanent members of the UN Security Council plus Germany) last July calls for lifting of the international economic and banking sanctions in exchange for curbs on Tehran’s nuclear program.
“Departments in the CBI and commercial banks have attended seminars at foreign banks to get familiar with the latest rules and regulations guiding the global banking industry,” Kamyab said. Banks are willing to issue L/Cs soon after the sanctions are removed.”
Kamyab, however, noted that it might take a couple of weeks for the banks to reconnect with SWIFT interbanking messaging system and the CBI is working to speed up the process.
“Fourteen banks are already connected to SWIFT, and five others are in the final stages of joining,” he was quoted as saying.
Forex Market Volatility
Regarding the recent volatility in the forex market, Kamyab attributed the increase in currency prices, which began six months ago, to a number of psychological factors. He pointed to the oil prices which are at 12-year lows and the political tensions in the region, saying all these elements have pushed up hard currency prices.
“Given all these factors, it can be said that the CBI has been successful in limiting the role of negative factors in the market,” he said. The official referred to the 2012 gyrations in the forex market when the rail lost almost 70% of its value in a few days, and noted that the regulator was able to curb heavy fluctuations in the market over the past two years.
He hoped that after the implementation of the nuclear deal the forex market would see better and stable conditions.
Bureaux de Change Grievances
Meanwhile, Abbas Masoudi head of Tehran Union of Bureau de Change Operators said the few official bureaus’ monopoly over the sale of foreign currency push up prices and should be blamed for the ongoing USD rally.
The senior analyst pointed to the volatility in the forex market saying that it is the fruit of the CBI’s unwanted and unjustified intervention in the forex market. “Comprehensive state intervention started with the birth of the state-run money exchange shops during former president Mahmoud Ahmadinejad’s first term,” he was quoted as saying by IRNA. Since then the CBI has continued to interfere in the market trying to curb the role of private money changers, he claimed.
“The CBI established competing bodies like the Association of Bureaux de Changes of Iran. It also demanded that the bureau owners receive operating permit from the CBI and not their association.” The regulator took this measure while according to a government directive in 2001, issuing permits should be the function of the relevant business syndicates and unions, he recalled.
Masoudi said in 2001-2005 when the private sector was in charge of managing the forex market many eagerly invested their money in the forex market. “It was not limited to Iranians. Many in the region, like Turkey and Dubai, looked to Iran’s forex market back then. Even some came to Iran and set up foreign exchange shops.”
On the recent raids on unlicensed shops selling hard currency he said it is better to settle the issue through negotiations and regulating their activities. “Otherwise brokers will carry on with their business in virtual networks or set up underground forex networks.” The CBI should trust the bureaus, he said, and urged the government to give the private sector the voice and space to manage and regulate the forex market.
